Are hospitals using EHRs to upcode?

Those concerns that hospitals are using electronic medical records to fraudulently generate bigger bills and boost their incomes? It turns out it shouldn’t be that much of a worry after all, at least according to a study in the journal Health Affairs.

The study, published in the July issue of the journal, was carried out by Julia Adler-Milstein, PhD, assistant professor in the School of Information and in the Department of Health Management and Policy, School of Public Health, University of Michigan, Ann Arbor, and Ashish K. Jha, MD, MPH, professor of health policy and management at the Harvard School of Public Health, Boston.

“There’s been a lot of hype about the issue of upcoding and the question of whether EHRs are going to drive up healthcare costs,” said Adler-Milstein. “And, on one hand, it’s clear that the functionality of many EHRs could lead to upcoding, but one of my hypotheses was that providers have already been forced to be really good at coding, because that’s how they make money in a fee-for-service world.”

Consequently, despite the ‘hype,” she was skeptical that providers had been waiting to implement EHRs to make billing even more financially lucrative.

Ironically, USA Today added to that hype with an article that came out at the same time as the Health Affairs study, reporting that the federal government is rewarding doctors and hospitals for implementing electronic health records that make it easier for healthcare providers to defraud programs like Medicare..

"There have been billions spent on these systems and incentives paid to providers, but there is no private or government agency that provides oversight," the article quoted Dan Bowerman, a Philadelphia chiropractor who USA Today identified as “having assisted in many state and federal fraud investigations.”

Those concerns about EHRs and fraud probably trace back to September 2012, when the U.S. Department of Health and Human Services (HHS) sent out a strongly worded letter to chief executives of the country’s major hospital associations warning them that “there are troubling indications that some providers are using this technology to game the system, possible to obtain payments to which they not entitled.”

According to HHS, those indications included the potential cloning of medical records and reports that hospitals were using EHRs to facilitate upcoding of the intensity of care or severity of patients’ condition as a way to increase revenue “with no commensurate improvement in the quality of care.”

That letter followed the publication of an article in the New York Times that reported that the move to electronic health records was contributing “billions of dollars in higher costs for Medicare, private insurers and patients by making it easier for hospitals and physicians to bill more for their services, whether or not they provide additional care.” The Times report was based partly on an analysis of Medicare data and found that hospitals that received government incentive payments for adopting EHRs had a 47 percent increase in Medicare payments between 2006 and 2010, compared to a 32 percent increase during the same time for hospitals that didn’t receive government incentives.

Adler-Milstein and Jha found that report to be unconvincing, Adler-Milstein said, since it “wasn’t in a peer-reviewed journal and it was hard to under their methods. So we really felt there was an opportunity to do a more robust study.”

Their research focused on hospitals that were more likely to change coding practices, such as for-profit hospitals, hospitals in competitive markets, and hospitals with a substantial proportion of Medicare patients.

“We decided to focus on hospital care because there’s where the big dollars are,” she said. “So, if upcoding was going to be problematic in any one area, it was going to be in the hospital setting.” Adler-Milstein and Jha designed a study comparing the billing records of 393 hospitals that adopted EHRs from 2008 to 2010, to 782 hospitals that had similar characteristics but had not adopted EHRs.

The two researchers found that hospitals that adopted EHRs did increase billing to Medicare, but at a comparable rate to the non-EHR adopters. They also found that hospitals that had adopted electronic clinical notes and computerized physician order entry didn’t have higher coding or Medicare payments than hospitals without EHRs.

“So we really shouldn’t be pointing the finger at EHRs in relation to upcoding,” concluded Adler-Milstein.

The results of the study suggest that when it comes to this issue, policymakers might think differently about “priorities and resources,” Adler-Milstein said. “How much time and effort should be spent pursuing EHR fraud? Our study is very clear that—at least when we are talking about inpatient hospital care—that it doesn’t make a lot of sense putting a lot of resources toward detecting and prosecuting fraud and upcoding as it relates to EHRs. That’s not to say that we shouldn’t continue to do research to see if there are problems in other settings.”